Key Positives From The Results
Recurring profit progress rate of 77.6% and net income progress rate of 82.4% are tracking well ahead of full-year guidance. As evidenced by the Renewable Energy PF segment's +67.2% YoY revenue growth, earnings contributions from growth investments are beginning to accelerate.
- Gross profit margin improved to 79.2% (+4.8pt YoY). COGS declined -18.2% YoY, highlighting the low marginal cost inherent in the platform-based business model
- Renewable Energy PF segment profit reached JPY 186M (+129.8% YoY), with renewable energy capacity under management reaching 354MW. A growing recurring revenue base anchored by long-term contracts predominantly exceeding 20 years
- AS business turned profitable (2Q standalone revenue JPY 88M, profit JPY 41M), with grid-scale battery capacity under management reaching 62MW. Secured an 18.7% share of primary offline procurement volume in the supply-demand balancing market
- Contracted capacity hit a record 1,177MW (+25.1% YoY), with the platform's customer base continuing to broaden
- Operating CF improved significantly to +JPY 2,809M (vs. -JPY 1,492M in the year-ago period), with FCF of +JPY 2,005M
Key Concerns From The Results
Power PF revenue declined -1.7% YoY, with DGP commission revenue down -5.4% YoY. Intensifying competition is driving down per-transaction unit prices, constraining growth in the core business—contracted capacity expansion alone is insufficient to offset the revenue headwind.
- Operating income of JPY 1,536M (-10.1% YoY), OPM at 46.2% (down -5.5pt from 51.7% in the year-ago period). SG&A surged +46.5% (+JPY 348M) as headcount expansion costs (+35.4% YoY) are running ahead of revenue
- Power PF segment profit of JPY 1,844M (-8.9% YoY). The downward trend in commission unit prices persists, warranting caution around the risk of falling below the mid-term plan's OPM target of 40%+
- Other businesses still posted a segment loss of -JPY 46M. Partially reflecting the absence of one-time J-Credit sales revenue from the prior period, stabilization as a new earnings pillar will take time
- Tangible asset capex of -JPY 744M (vs. -JPY 9M in the year-ago period), with full-scale battery investment ramping up and expected to weigh on future cash flows
- Short-term borrowings surged from JPY 260M to JPY 1,490M. While funded through committed credit facility drawdowns for working capital, growing funding requirements driven by transaction volume expansion warrant monitoring
Focus Areas / Items To Monitor Going Forward
- At what level the commission unit price decline in the Power PF business bottoms out. Contract renewal trends in 3Q onward (concentrated in April) — both retention rates and new customer acquisition — are key to achieving full-year guidance
- Investment payback cycle for the grid-scale battery business. The mid-term plan targets JPY 10B in investment over three years, but DGAM-owned capacity remains at just 0.2MW — pipeline visibility toward the FY07/2028 target of 40MW needs clarification
- Capacity contribution payment settlement gains of JPY 133M boosted 2Q non-operating income, but this is one-time in nature driven by regulatory factors, raising questions about recurrence in H2 and beyond
- Outlook for when the DGP commission unit price decline bottoms out, and pricing strategy
- Expected retention rate for the April contract renewal season in the Power PF business, versus prior-year actuals
- Quantification of how futures trading and bespoke contract formats impact DGP commission unit prices and enhance value-added
- Sustainability of AS business profitability and timeline for expanding participation in the supply-demand balancing market
- Development pipeline status of DGAM battery storage facilities and confidence level in reaching the 40MW target by FY07/2028
- Funding strategy for the JPY 10B three-year battery investment plan (mix of internal funds, debt, and equity financing)
- Timeline for entry into the corporate low-voltage segment and first-year target scale
- Revenue impact on the Renewable Energy PF business from commencing wind power supply-demand management
- Actual PPA conversion rate among the 205 Econohashi member companies
- Outlook for capacity contribution payment settlement gains in H2 and beyond
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 3,328M | +0.6% |
| └ DGP Commission Revenue | JPY 2,293M | -5.4% |
| Cost of Goods Sold | JPY 693M | -18.2% |
| Gross Profit | JPY 2,635M | +7.1% |
| (Gross Profit Margin) | 79.2% | +4.8pt YoY |
| SG&A | JPY 1,098M | +46.5% |
| Operating Income | JPY 1,536M | -10.1% |
| (Operating Income Margin) | 46.2% | -5.5pt YoY |
| Recurring Profit | JPY 1,651M | -0.5% |
| Net Income Attributable to Owners of Parent Company (Interim) | JPY 1,216M | +2.6% |
| EPS | JPY 31.02 | -6.8% |
| Diluted EPS | JPY 26.39 | - |
| Electricity Handled | 1,493GWh | - |
| Contracted Capacity | 1,177MW | +25.1% |
| Headcount | 88 | +35.4% |
Performance By Business Segment
| Segment | Revenue | YoY | Segment Profit | YoY | Margin |
|---|---|---|---|---|---|
| Power PF | JPY 2,864M | -1.7% | JPY 1,844M | -8.9% | 64.4% |
| Renewable Energy PF | JPY 343M | +67.2% | JPY 186M | +129.8% | 54.4% |
| Other Businesses | JPY 121M | -36.0% | -JPY 46M | - | - |
| Adjustments | - | - | -JPY 448M | - | - |
| Total | JPY 3,328M | +0.6% | JPY 1,536M | -10.1% | 46.2% |
- Renewable Energy PF: +67.2% revenue growth YoY. Driven by PPA matching expansion through the 6th RE Bridge auction (73 demand-side members, 426 registered power plants) and the growing Econohashi membership of 205 companies (cumulative FIT non-fossil certificate volume of 2,485GWh). New frontiers also being explored, including the first contract for supply-demand management of battery-equipped solar power plants
- AS Business (within Other Businesses): Turned profitable in 2Q standalone with revenue of JPY 88M and profit of JPY 41M. Grid-scale battery capacity under management reached 62MW (+38MW QoQ), and 147MW secured in the capacity market main auction (+124MW YoY)
- Power PF: Revenue declined -1.7% YoY. Per-transaction commission unit price fell -1.9% QoQ, continuing the downtrend. DGP commission revenue remained flat amid intensifying competition. 2Q standalone OPM of 35.5% (-17.7pt from 53.2% in 1Q)
- Other Businesses (segment total): Revenue declined -36.0% YoY, primarily due to the absence of one-time J-Credit sales from the prior period
Progress Versus Full-Year Guidance
Revenue progress of 53.0% is somewhat modest, but profit metrics are tracking well ahead — operating income at 65.0%, recurring profit at 77.6%, and net income at 82.4%. Management acknowledged that certain line items exceeded 80% progress, but left full-year guidance unchanged citing continued competitive pressures and uncertainty around transaction volumes and market pricing in H2. On a net income basis, the level invites expectations of potential upside.
| Item | Value (H1 Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 3,328M | JPY 6,281M | 53.0% |
| Operating Income | JPY 1,536M | JPY 2,363M | 65.0% |
| Recurring Profit | JPY 1,651M | JPY 2,128M | 77.6% |
| Net Income | JPY 1,216M | JPY 1,476M | 82.4% |
- The Power PF business is predominantly based on annual contracts, with renewals concentrated in April (3Q). 3Q is materially impacted by churn and new customer acquisitions during the renewal season
- Electricity volumes exhibit seasonality, peaking in summer (1Q: Aug–Oct) and declining in winter (2Q: Nov–Jan). The year-ago period displayed the same pattern
- Non-DGP commission revenue (including settlement amounts with general electricity transmission/distribution operators) fluctuates significantly on a quarterly basis
Changes To Guidance
No revision to full-year consolidated guidance. The company maintained its forecast published on September 11, 2025. Despite progress exceeding 80% on certain line items, guidance was left unchanged at this time given continued competitive pressures and uncertainty around transaction volumes and market pricing.
Commentary On Shareholder Returns
No revision to dividend forecast. For FY07/2026, the company maintains its forecast of JPY 0.00 year-end dividend (JPY 0.00 annual). The no-dividend policy continues.
Financial Position
Equity ratio at 46.3% (-0.2pt from prior FY-end 46.5%), broadly stable. Net assets increased by +JPY 1,346M to JPY 9,623M driven by profit accumulation. Total committed credit facilities exceed JPY 10B, securing working capital to support growing DGP transaction volumes.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Deposits | JPY 7,875M | +69.4% vs. prior FY-end |
| Total Assets | JPY 20,787M | +16.7% vs. prior FY-end |
| └ Total Current Assets | JPY 18,662M | +12.9% vs. prior FY-end |
| └ Total Non-Current Assets | JPY 2,124M | +65.3% vs. prior FY-end |
| Shareholders' Equity | JPY 9,623M | +16.3% vs. prior FY-end |
| Total Interest-Bearing Debt | JPY 2,705M | +67.7% vs. prior FY-end |
| └ Short-Term Borrowings | JPY 1,490M | Increased from JPY 260M at prior FY-end |
| └ Current Portion of Long-Term Debt | JPY 286M | - |
| └ Long-Term Debt | JPY 928M | - |
| Accounts Receivable - Other | JPY 8,972M | Attributable to JEPX settlement advances |
| Accounts Payable - Other | JPY 6,586M | Consumer agency costs |
| EBITDA | JPY 1,545M | Operating income JPY 1,536M + D&A JPY 8M |
News Released Alongside The Earnings Announcement
None
Major Announcements During The Quarter
- 2025/12/25Transitioned two Kyushu Ohisama Hatsuden solar plants from FIT to FIP, commencing operations as battery-equipped facilities. First contract secured for supply-demand management of battery-equipped PV Addressing curtailment through effective use of renewables — Digital Grid's first transition of battery-equipped solar plants to FIP scheme
- 2026/02/03Grid-scale battery capacity under management surpassed 50MW. Announced plans to accelerate expansion of the AS business Grid-scale battery capacity under management surpasses 50MW
- 2026/02/26Invested in ESREE Energy, a thermal storage/battery system developer. Strategic investment aimed at acquiring expertise in next-generation thermal energy business Investment in thermal storage/battery system developer "ESREE Energy" — Acquiring future expertise in next-generation thermal energy
- 2026/03/09Commenced supply-demand management for wind power. Expanding supported energy sources from solar to wind, leveraging proprietary AI forecasting technology Commencing supply-demand management for wind power — Leveraging newly developed proprietary AI forecasting technology
Large-Shareholding Filings / Material Proposals Over The Past Year
- Toshiba: 13.48% → 12.90% (2026/01/23) — Policy shareholding to maintain cooperative relationship. Change filed due to modification of material collateral agreements
- FD: 5.39% → 5.39% (2025/11/10) — Policy shareholding to maintain cooperative relationship. Amendment filing triggered by modification of material collateral agreements
- Takuma Chikakiyo (Director/COO): — → 5.00% (2025/04/28) — Held as a director of the issuing company for management participation and as a stable shareholder
- Toshiba: — → 13.48% (2025/04/25) — Policy shareholding to maintain cooperative relationship (initial large-shareholding filing)
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